The Government of Nepal and the World Bank have announced a partnership to develop and issue catastrophe (CAT) bonds aimed at protecting the country against the financial consequences of major earthquakes. According to a press release issued by the Ministry of Finance on October 15, 2026, the agreement was reached during a meeting between Finance Minister Dr. Swarnim Wagle and World Bank officials. A mandate agreement was signed on Nepal’s behalf by Finance Ministry Under Secretary Dr. Ghanshyam Upadhyay, with representatives of the World Bank participating in the signing. The initiative represents an effort to introduce capital-market-based disaster risk financing instruments to strengthen Nepal’s financial resilience.
Under the agreement, Nepal and the World Bank will develop a mechanism enabling the government to receive financial resources following a major earthquake, subject to the conditions established under the catastrophe bond arrangement. The Ministry of Finance stated that the initiative would support Nepal’s disaster risk management system by helping address funding gaps, facilitating disaster recovery and reconstruction, and strengthening financial protection against catastrophic events. The arrangement is intended to provide an additional financial safeguard when severe earthquakes place extraordinary pressure on public finances and existing disaster response resources.
The World Bank Group’s Treasury Department will work closely with the Government of Nepal and market participants to assess the feasibility of the proposed bonds, evaluate potential structures and develop the necessary issuance arrangements. Catastrophe bonds are financial instruments that transfer specified disaster risks to capital-market investors, allowing participating governments or institutions to access funds when predefined disaster conditions are met. The Ministry of Finance highlighted that the partnership would explore opportunities to transfer Nepal’s earthquake-related financial risks to international capital markets through this mechanism.
The initiative has been developed with the involvement of senior officials from Nepal’s Ministry of Finance and the World Bank. By exploring catastrophe bonds, Nepal aims to diversify its disaster financing arrangements beyond traditional budgetary allocations and post-disaster assistance. The agreement marks the beginning of the bond development process rather than the completion of an issuance, with further technical assessments and structural arrangements required before the proposed financial instrument can become operational. The partnership is expected to contribute to Nepal’s broader efforts to improve earthquake preparedness, disaster risk reduction and long-term fiscal resilience.
